Singapore Prime Minister: What impact does tariffs have on Singapore?

Recently, Singapore Prime Minister Heng Swee Keat mentioned the impact of the United States' "equal tariffs" on the Singapore economy. As an economy highly dependent on external trade, how should Singapore respond to the rising global protectionism? Heng Swee Keat stated that the implementation of the U.S. "equal tariffs" marks the end of a rule-based era of globalization and free trade, and the world is entering a more arbitrary, protectionist, and dangerous phase. The United States is no longer promoting multilateral trade rules, but instead implementing a new policy of levying "equal tariffs" based on country of origin, effectively abandoning the WTO framework. Although the impact of "equal tariffs" on Singapore is currently limited, if other countries follow the United States' lead and adopt unilateral trade policies, small countries like Singapore will face the risk of marginalization. Heng Swee Keat also mentioned that as retaliation measures against the U.S. may increase, the possibility of global trade disputes escalating is rising, which will damage trade and investment, slow down global economic growth, and have a greater impact on Singapore due to its high dependence on trade. Given this situation, Heng Swee Keat stated that the government will remain vigilant, enhance capabilities, deepen international cooperation, and call on the people to stay clear-headed and united, preparing for potential future shocks. The full text is as follows: Dear fellow Singaporeans, I have previously stated that the world is undergoing changes that will adversely affect small open economies like Singapore. In the past, some doubted this assessment, but the recent statement from the United States has made this incontrovertible. This is a sign of a drastic change in the global order. The era of rule-based globalization and free trade has come to an end. We are stepping into a more arbitrary, more protectionist, and more dangerous new phase. For decades, the United States has been the cornerstone of the global free market economy. It advocated for free trade and led the establishment of a multilateral trading system supported by clear rules and norms, in which countries could achieve win-win outcomes through trade. This system, led by the World Trade Organization (WTO), has brought unprecedented stability and prosperity to the world and the United States itself. We must be clear that this system is not perfect. Singapore and many other countries have long called for its reform to update the rules and make the system better. However, the current actions of the United States are not reform, but a complete abandonment of the system it once built. The United States has proposed a new strategy of implementing "equal tariffs" on different countries, which is a complete denial of the WTO framework. The United States has placed Singapore in the lowest tier and imposed a 10% tariff on us. So, the direct impact on us may be limited for now, but if other countries follow the United States, abandon the WTO, and start trading on their own terms with each country, the consequences will be profound and serious. This will pose a threat to all countries, especially small countries like Singapore. We will face the risk of marginalization, being squeezed, and falling behind. We can also foresee that other countries around the world will strongly respond to the United States' new tariff policy. Singapore has decided not to retaliate with taxes, but other countries may not be as restrained. The likelihood of a comprehensive global trade friction is on the rise. Higher tariffs combined with the uncertainty brought by retaliatory measures other countries may take will seriously drag down the global economy. International trade and investment will be affected, global economic growth will slow down. And the blow to Singapore will be greater than to other countries because of our high reliance on trade. The last time the world experienced a similar situation was in the 1930s. Trade friction escalated continuously, eventually leading to armed conflict and the outbreak of World War II. No one can predict how the current situation will develop in the coming months. But we must be clear that the accumulating risks in the world are real. International institutions are weakening, international norms are eroding, more and more countries are acting solely in their narrow self-interest, even resorting to the use of force or pressure to achieve results. This is the harsh reality we are facing now. We will remain vigilant, enhance our own capabilities, strengthen partnerships with like-minded countries. Compared to many countries, we have made more preparations. We have reserves, social cohesion, and a firm will. But we must be prepared for more shocks. The global calm and stability we were once familiar with will not return for a short time. We can no longer rely on the rules that once protected small countries to remain effective. I am sharing this with all of you in the hope of preparing ourselves psychologically, not to be shocked by sudden situations. We cannot be complacent, we cannot take things lightly. The risks are real and significant. The road ahead will be more challenging, but as long as we stand united, Singapore can still stand firm in this turbulent world. This article is reprinted from "Wall Street Seen" by author Zhu Xueying; GMTEight editor: Huang Xiaodong.